Byju's Alpha sues founder, associates over $533M theft claims

New York: Byju's Alpha, a US-based special purpose financing vehicle, has sued Byju Raveendran and his wife Divya Gokulnath, alleging they "orchestrated theft of $533 million" from a $1.5 billion Term Loan B.

Byju’s Alpha announced that, after the United States Bankruptcy Court for the District of Delaware issued a $533 million judgment against Riju Ravindran and Byju’s ultimate corporate parent in India, the company has initiated a lawsuit against Byju Raveendran, his co-founder and wife Divya Gokulnath, as well as his advisor, Anita Kishore.

The lawsuit states that each of them co-orchestrated and executed a lawless scheme to conceal and steal $533 million of loan proceeds (the ‘Alpha Funds’), according to a press release.

“On the heels of the Delaware Bankruptcy Court’s recent judgment against his brother and companies, this action is being brought to now hold Byju Raveendran, the former CEO of BYJU’s Alpha, and two more of his co-conspirators – namely his co-founder and close business associate – accountable for their roles in masterminding the theft of more than half a billion dollars,” said the ad hoc group of term loan lenders of Byju’s Alpha’s Term Loans.

They further stated that “it is clear that Byju, Divya, and Anita deliberately hid the assets of BYJU’s Alpha and repeatedly were deceptive about the location of the money in order to steal funds rightfully owed to the Lenders”.

“In light of the Court’s recent decision, there can be no doubt that they acted unlawfully and tried to cover their tracks, breaching fiduciary duties and making numerous misrepresentations, among other misconduct, in the process. If it is not abundantly clear to them by now, Byju and his cohorts will soon learn that the laws of the United States are immutable, and they can either choose to live the rest of their days as international fugitives or face the music and return the money they stole,” stated ad hoc group of term loan lenders of Byju’s Alpha.

In March 2022, just months after securing Term Loans, Byju's Alpha, then controlled by Byju's enterprise, defaulted on its credit agreement. Byju's allegedly initiated a series of unlawful and systematic fraudulent transfers of the Alpha Funds in April. Byju's Alpha, along with Byju and his brother Riju Ravindran, acknowledged the defaults through multiple amendments and forbearance agreements to the credit agreement.

On March 15, 2024, Byju’s responded to a preliminary injunction from the Delaware Bankruptcy Court that froze the Alpha Funds, halting their use or movement. In its statement, Byju’s asserted that the funds were securely held in one of its subsidiaries and would remain there as mandated by the order. However, on October 9, 2024, Byju’s submitted a sworn declaration to the Delaware Bankruptcy Court, claiming that the Alpha Funds had already been expended.

Byju’s Alpha is suing for damages related to Byju’s breach of fiduciary duties and the aiding and abetting of this breach by Divya and Anita. The lawsuit also seeks an accounting of the Alpha Funds, damages for conversion and civil conspiracy, reimbursement of legal and interest expenses, and any other relief deemed appropriate by the court.

(inputs from IANS)